Brussels breaks deadlock over defense factory permits

Negotiators managed on Tuesday to reach agreement on two of three proposals to speed up the European defense industry with faster permits for new defense production facilities.

The files are part of the Defense Readiness Package presented last year by the European Commission to reduce red tape and unlock 800 billion euros of investment in the defense sector by the end of the decade.

The agreement on the third file was first reached in the late afternoon, after the two previous files had initially failed. The third concerns a partial rollback of environmental and chemical regulations for the defense industry, as well as easier access for small businesses to EU defense funding.

The European Defense Fund (EDF) will also be allowed to cover the costs of testing in Ukraine and defense projects developed jointly with Ukraine under the agreement, reached after more than 24 hours of marathon talks.

“The Defense Omnibus is, in fact, a much-needed reality check for Europe’s defense capabilities,” said Marie-Strack Zimmermann, chair of the European Parliament’s Security and Defense Committee (SEDE). Euractiv.

“This makes it all the more important that we have now made good progress in two of the three main negotiations and have been able to conclude them constructively. This shows that, where the political will exists, Europe can also act effectively in the defense sector,” she added.

The most controversial aspect of the dossier was a proposal to open intellectual property rights for EDF-funded projects to all participating countries – a step that parts of the defense industry and some EU countries argued would go too far.

The co-legislators eventually agreed to some restrictions under which participating countries would have general access rights but would not be able to transfer ownership of intellectual rights.

This new compromise still needs to be approved by EU countries, as it goes beyond the approved mandate given to the presidency of the Cypriot Council.

This first interim deal prompted negotiators to reopen negotiations after 7pm on the second file – after it had ended earlier in the day without a deal – and push it across the finish line.

The issue of permits

A compromise proposal from the Assembly on the issue of automatic approval for factory permits, asking local governments to respond quickly to requests, was accepted.

EU countries had initially pushed for a longer deadline and broad exemptions in cases involving health risks, worker safety, national security or environmental concerns. Compromise, seen by Euractivsets a deadline of 42 working days with a possible extension of up to 60 working days.

An exception to automatic approval would be possible if an exception is strictly limited to legally verifiable reasons, such as a major risk to human health and national security. Broader reasons, as suggested by EU countries, such as environmental protection, worker safety or public health are rejected, although health risks from environmental effects may be considered.

“Today’s agreement on defense readiness and licensing proposals is essential to facilitate investment and defense conditions for the defense industry to enable us to respond effectively to security challenges,” a Cyprus official said.

Transport permit

But a deal has proved elusive over simplified rules for cross-border transfers of defense goods within the EU and proposals to give greater flexibility to European defense procurement.

Therefore more technical talks are needed.

Strack-Zimmermann blamed capitals for the lack of progress, saying “instead of real acceleration, we are seeing a steady stream of new demands for national exemptions, special agreements and maximum flexibility”.

“This is not the way to build European defense capabilities. The problem is no longer the technical details of individual regulations, but the political stance of some member states,” she said.

EU countries continue to oppose the Commission’s proposal to create a general transport license within the EU for defense goods, fearing it would encroach on exclusive national powers. As an alternative, the Council has proposed the creation of a coordination group chaired by the Commission to address the simplification of arms transfers within the EU.

Another sticking point has to do with Europe-wide tenders. MEPs believe tenders are not necessary for arms originating from the EU, Ukraine or third countries that have a security agreement with the bloc, provided contracts remain below a certain threshold. Capitals, however, object to the geographic limitation of the exemption.

“It is a real disappointment that member states refused to move an inch in the negotiations, even though all institutions share the same goal of strengthening European defense preparedness,” said Pekka Toveri, a Finnish MEP from the European People’s Party.

“We remain committed to finding a compromise to achieve the package and the coming weeks will be crucial for negotiations,” he added.

(aw, jp)